Surviving a Bear Market

Surviving a Bear Market

Originally published 10/28/22: The current economic environment is testing the discipline of even the savviest of investors. Some may panic and jump ship, while others will ride it out and wait for calmer waters. Which mindset do you have?

All markets move in cycles, including periods of steep contraction. Since equity markets have reached multiple record highs over the last few years a downturn was inevitable. But, if the term “bear market” scares you, here are some facts to put it in
perspective:

•  Bear markets are normal. Since its inception in the late 1920s, the modern S&P 500 has seen 26 bear markets – stocks lost 36% on average. During that same time long-term investors were rewarded with 27 bull markets where stocks gained an average of 114%.*

•  The average frequency between bear markets is 3.6 years. You could see about 14 bear markets during a 50-year investment window. Since 1930, the market has been bearish for a time equal to 20.6 years. This means that stocks have been on the rise the other 71.4 years!*

•  Bear markets last for significantly less time than bull markets. Bears last on average 9.6 months. Bulls last on average 2.7 years.*

*Source: cnbc.com; 6/13/22

These are challenging times, but the markets have historically proven remarkably resilient over the long term. Stick with your well-diversified, long-term financial plan, partner with a trusted financial advisor, and keep inflammatory headlines in perspective to stay on course toward your financial objectives.

Author: Jill Mollner, MBA, CFP®
Wealth Advisor, RJFS
Branch Operations Manager

Volatility isn’t likely to go away in the coming months, but you shouldn’t have to handle difficult markets alone. Your financial advisor can be your trusted guide. Here are a few questions to help ensure you’re getting the service and advice you need:

Does your advisor review your investments daily?

Our advisors review fund performance daily, weekly, and monthly. And our Investment Committee systematically tests and replaces positions in advisory accounts that no longer meet our standards. This diligence is especially important in volatile markets.

Do you meet with your advisor at least once a year?

What do you talk about? These meetings should be more than just a chance to catch up. Have market conditions thrown your investment strategy off-track? How do recent life events affect your estate plan? Do new tax laws affect you? We meet with clients at least once each year, and more frequently based on their needs.

NOT A CORNERSTONE CLIENT?

Given today’s environment, getting a second opinion about your plan could help you make smarter decisions. Just like you, our clients want to be able to enjoy life and take care of the people they care about. They look to us for help living the life they’ve imagined no matter what is happening in the financial markets or economy.

Call 605.357.8553 or email cfsteam@mycfsgroup.com today to schedule a complimentary, no-obligation appointment with one of our wealth advisors.

Any opinions are those of Jill Mollner and not necessarily those of Raymond James. This content is for general information only and is not intended to provide specific advice, an endorsement, or recommendations for any individual. Raymond James Financial Advisors do not render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks always involves risk, including the possibility of losing one’s entire investment. No strategy assures success or protects against loss. To determine what is appropriate for you, consult a qualified professional. 2022.10.28 #30410. 2023.11.01 #325547

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Are you Retirement Ready?

Are You Retirement Ready?

When it comes to living the life you imagine in retirement, the earlier you prepare, the better your chances of reaching your goals. Just like planning a wedding or building a new home, there are a lot of decisions to make and variables to consider.

Find out where you stand with our Retirement Readiness Checklist. Don’t panic if you’re just getting started or have a lot left to do. Our team’s step-by-step process, the Cornerstone Experience®, provides one-on-one attention and guidance to help you enjoy life today and take care of the people you care about for the long-term.

FINANCIAL

Where will your monthly retirement income come from?

79% of workers plan to keep working in retirement, while 34% of retirees actually do work in retirement.1

Work $_________
Assets $_________
Social Security $_________
Insurance $________
Pensions $_________
Other (inheritance, etc.) $_________

 

Do you know how much you’ll need for living expenses when you retire?

I know what my monthly essential expenses will be: $_________
I know what my monthly extra expenses will be: $_________

 

Do you have a contingency plan to take care of yourself and those you love if you can’t work as long as you intend to at your current position?

46% of retirees leave the workforce earlier than planned because of a hardship, such as a health problem or disability. Another 31% say they retired due to changes at their company.1  

Yes
No

 

How will you handle healthcare costs?

While it’s impossible to precisely predict out-of-pocket expenses, a retired couple can easily spend $10,000 a year above and beyond what’s covered by traditional Medicare.2

Medicare
Long-term care insurance
Health Savings Account (HSA)

LEGACY

Are you planning to provide for others or do any charitable giving during your retirement or after you’re gone?

College fund for heirs
Gift to charitable organization(s)
Inheritance

Which essential documents do you have in place to ensure your wishes are carried out if something were to happen to you?

Trust
Living will
Power of attorney
Medical power of attorney
Will
Ethical will
Personal property memorandum or disposal list
Organized records, including contact information for your attorney, wealth advisor, tax advisor, etc


Are you planning to
provide for others or do any charitable giving during your retirement or after you’re gone?

 College fund for children/grandchildren
 Leave an inheritance
 Gift to charitable organization(s

 

Have you communicated your wishes to the people responsible for carrying them out?  

Guardian
Executor
Family

LIFESTYLE

What will you do with your time?

 Travel
 Work part time
 Volunteer
 Spend time with grandkids
 Master a hobby or start a new one
 Take classes or go back to school
 Keep doing activities I’m currently doing

Is there anything you’ve always wanted to do “if you had the time” or if money was no object?

Have you always wanted to own your own plane? Do you feel called to volunteer building housing in Rwanda? Did you miss your true calling of being a kindergarten teacher or university professor? Lawyer or social worker? Anything is possible with the right plan and support! ______________________________________________________

___________________________________________________________

Who will you spend your time with?

 Current group of friends
 Plan to meet new friends
 Continue attending professional groups I’m involved with
 Join a new organization
 Time with family will keep me busy

Download The Questionnaire

The pdf opens right away after you enter info and hit “Download the Questionnaire.”


1 2023 Retirement Confidence Survey, Employee Benefit Research Institute and Greenwald Research
2 Ready to Transition to Retirement, Raymond James, March 2019

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Your Plan Can Create Meaningful Outcomes In Your Life

Our team will analyze your income needs for today and tomorrow, then help you develop and implement a plan to help you achieve the life you’ve imagined in retirement.

Retirement Planning

Gain confidence with goal setting and monitoring, comparing scenarios to understand how factors impact your plan.

Estate & Charitable Planning

A basic understanding of estate planning can help you preserve your assets, take care of the people who are important to you, potentially reduce taxes, and avoid common mistakes.

Tax Planning Strategies

Keeping your tax liability to a minimum is an essential part of maintaining your Cornerstone financial plan.

Investment Management

Our advisors will help design a strategy that is clearly defined, matches your goals, and aligns with your risk preferences and lifestyle.

Risk Management / Insurance Planning

We use best financial practices, built on an industry-renowned framework, to help us understand YOUR acceptable levels of risk-and-reward with unparalleled accuracy.

Hear Directly From Our Team

Shelby Bierema Client Relationship Manager

I was immediately drawn to the team and atmosphere at Cornerstone. With my first step in the door, I felt accepted, seen, and valued. I am proud to be part of an organization that truly believes in placing people over profit.

Shelby Bierema, FPQP®                                      Manager of Client Relations

Andrew Ulvestad AAMS Wealth Advisor Financial Planner Sioux Falls, Huron, SD

It wasn’t about sales; it wasn’t about money. Cornerstone displayed a genuine love for their clients and I knew it was something I wanted to be a part of.

Andrew Ulvestad, AAMS®                                      Wealth Advisor

Hear Directly from Our Clients

“Gordon, you have built an outstanding organization, and have selected qualified professional employees to serve your clients. The hallmark to your success is dedication, honesty, integrity, trust and your personal faith. Your leadership has established for your clients a sense of pride and belonging to your organization. Pauline and I will always be grateful for what you have done for us during our retirement years. We are grateful to you for being our Financial Advisor and friend during the past 20 years.”

 

~Eldon and Pauline Nelson, Clients since 1999

The statement is a testimonial from current clients as of March 13, 2023, and may no longer be applicable or a client. No compensation was paid in exchange for the testimonial, it was not solicited by the advisor, and client consents to use of this testimonial in the advisor’s advertisements.

The testimonial is not representative of all client’s experience with the advisor, not based on performance, and not a guarantee of future performance or success. Investing involves risk and isn’t always profitable.

The advisors at Cornerstone Financial Solutions, Inc. provide an outstanding client experience and integrated, full-service financial planning in a family-like culture. The practice focuses on client education and coaching with frequent reviews to help ensure clients are on-track to realize their financial goals.

The unparalleled level of service is best suited for those with a minimum of $500,000.00 in investable assets, who want to work with a fiduciary specializing  in comprehensive financial planning.

The Cornerstone team has over 140 years of combined team experience and 30 years in business, and is backed by the power of Raymond James, one of the top financial institutions in the US.

Learn more about The Cornerstone Experience®.

5 Considerations for a Successful Social Security Strategy

5 Considerations for a Successful Social Security Strategy

Considerations for a Successful Social Security Strategy

When it comes to deciding when to claim your benefits and plan your Social Security strategy, there are several key factors to consider. These factors can greatly impact the amount of benefits you receive and your overall financial security in retirement. In this article, we will explore five essential elements that should be a part of your Social Security strategy: age, employment, marital status, taxes, and needs. Understanding how these factors come into play can help you make informed decisions about your Social Security benefits.

1. AGE

Age is crucial in your Social Security strategy. Your monthly benefit depends on lifetime earnings and when you claim. Early claims reduce payments while waiting until age 70 increases them with delayed retirement credits and cost-of-living adjustments. Full Retirement Age (FRA) varies by birth year and serves as the benchmark for receiving your full, unreduced benefit. Planning your Social Security strategy around your FRA can help you make informed decisions about when to claim benefits based on your individual circumstances and financial goals.

2. EMPLOYMENT STATUS

One of the most critical considerations when planning a Social Security strategy is the impact of working while claiming benefits. Understanding the earnings limitations is paramount; claiming benefits before reaching full retirement age (FRA) while earning above the limit can result in reduced Social Security payments, affecting your overall income. Moreover, working can influence your lifetime benefits, with the potential for both temporary reductions due to earnings limits and increases through delayed retirement credits if you continue to work past your FRA. Working while claiming Social Security benefits is a complex but crucial consideration when planning your retirement strategy. It requires a careful balance between income needs, tax considerations, and your long-term financial goals.

 3. MARITAL STATUS

Marital status plays a pivotal role in planning for Social Security benefits, with significant differences in how benefits are calculated and accessed. Married individuals often have access to spousal and survivor benefits, which can bolster their combined retirement income. Coordinating when and how each spouse claims benefits becomes crucial to optimizing the household’s Social Security strategy. Conversely, single individuals have no spousal benefits to consider but may have more control over their claiming decisions. Divorced or widowed individuals also have unique considerations, as they can often claim benefits based on their ex-spouse’s or deceased spouse’s work record. Overall, understanding these distinctions in marital status is essential for tailoring a Social Security plan that aligns with your individual and family financial goals and needs in retirement.

4. TAXES

Including tax considerations in your Social Security strategy makes a difference. Taxes can significantly impact your benefits, depending on your modified adjusted gross income (MAGI). This can potentially push you into a higher tax bracket. Careful planning is essential to minimize this tax burden, so be sure to assess the tax implications before claiming benefits. While taxes shouldn’t solely dictate your timing, understanding their impact on your after-tax retirement income is vital. Exploring strategies like early voluntary withdrawals from retirement accounts to manage tax thresholds can help align your Social Security strategy with your unique financial circumstances and goals.

5. FINANCIAL NEEDS

Considering your financial needs is another key aspect of your Social Security strategy. To determine the right retirement timing, assess the cost of sustaining your desired lifestyle without full-time work. Calculate income from external earnings, Social Security, and investments to cover your expenses. Consider factors like inflation, emergency funds, healthcare costs, and long-term care provisions to ensure your financial plan is robust and adaptable to changing circumstances.

 

Find Support for Your Social Security Strategy

Jill Mollner, MBA, CFP®

Your Social Security strategy should be a well-thought-out plan that takes into account your age, employment, marital status, tax considerations, and financial needs. Each of these factors plays a significant role in determining the optimal time to claim your benefits and ultimately influence your financial well-being during retirement. Your financial advisor can help you thoughtfully evaluate your situation and determine a strategy to optimize your Social Security benefits. 

Contact our office for further guidance and insights.

Call 605-357-8553 or email cfsteam@mycfsgroup.com.

Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.

Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

7 Rules for Inherited IRAs

7 RULES FOR INHERITED IRAS

Cornerstone is pleased to bring you this article by Ed Slott and Company, LLC, an organization providing IRA education and analysis to financial advisors, institutions, consumers, and media across the country. Our association with this organization helps us stay up to date on the latest developments in IRA and tax law. As always, give us a call if you’d like to discuss!

By Sarah Brenner, JD
Director of Retirement Education, Ed Slott and Company, LLC

Many IRA assets will ultimately go to nonspouse beneficiaries. When these beneficiaries inherit the funds, special rules kick in. Inherited IRAs are not like your own personal IRA account.

Seven rules for inherited IRAs that may surprise you if you are a nonspouse beneficiary:

1. You cannot contribute to your inherited IRA. You cannot make contributions to an inherited IRA. If you do have your own IRA, you cannot add those funds to the Inherited IRA or vice versa.

2. You can move your inherited IRA. If you are unhappy with the investment choices or the custodian, you can move your inherited IRA to another custodian, and you can select different investment options. However, you must move the account by direct transfer, and the new account must be an inherited IRA as well. As a nonspouse beneficiary, you cannot take a distribution and then roll it over within 60 days.

3. You may be able to do a QCD. If you are charitably inclined, you may be able to take advantage of a qualified charitable distribution (QCD) and move up to $100,000 of your IRA funds (annually) directly to the charity of your choice in a tax-free transfer. To do a QCD you must be 70 ½ or older.

4. You cannot convert your inherited IRA. Many times nonspouse beneficiaries are interested in having a Roth IRA. Unfortunately, the rules do not allow nonspouse IRA beneficiaries to convert inherited IRAs to Roth IRAs.

5. You may be subject to annual required distributions, or the 10-year rule at a minimum. You can’t keep the funds in your inherited IRA forever. If you inherited the IRA funds in 2020 or later, as a nonspouse beneficiary you will most like be subject to a 10-year payout-period, possibly with annual RMDs during the 10 year period. Certain eligible designated beneficiaries who inherit in 2020 or later and those beneficiaries who inherited prior to 2020 may be still be able to stretch RMDs over life expectancy.

6. Your distributions may be taxable, but there will be no penalty. Inherited IRAs are never subject to the 10% early distribution penalty. However, if you inherit a traditional IRA, it is likely that the distributions you take will be taxable. If you inherit a Roth IRA, you are more fortunate from a tax perspective. Distributions from an inherited Roth IRA will most likely be tax-free.

7. You should name a successor beneficiary. When you inherit an IRA, it makes sense to name a beneficiary. If you don’t, the default provisions in the IRA document are likely to apply. In many cases this would mean the funds would go to your estate which can mean more taxes and the time and expense of probate.

Gordon Wollman and Ed Slott

Gordon Wollman, Founder and President of Cornerstone Financial Solutions, and Raymond James Wealth Advisor, with Ed Slott at the 2023 Spring workshop for members of Ed Slott’s Elite and Master Elite IRA Advisor Group℠.

Membership in Ed Slott’s Elite IRA Advisor Group(TM)  is one of the tools our advisors use to help you avoid unnecessary taxes and fees on your retirement dollars. Gordon attends in-depth technical training on advanced retirement account planning strategies and estate planning techniques. And semiannual workshops analyzing the most recent tax law changes, case studies, private letter rulings, Congressional action and Supreme Court rulings help keep attendees on the cutting-edge of retirement, tax law and IRA distribution planning. Through his membership, Gordon is immediately notified of changes to the tax code and updates on retirement planning, and he has 24/7 access to Ed Slott and Company LLC to confer with on complex cases.

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. Changes in tax laws or regulations may occur at any time and could substantially impact your situation.

ACKNOWLEDGMENT: This article was published in The Slott Report on irahelp.com by Ed Slott and Company, LLC, an organization providing timely IRA information and analysis to financial advisors, institutions, consumers, and media across the country and is distributed with its permission. Copyright ©2023, Ed Slott and Company, LLC Reprinted from The Slott Report, September 06, 2023, with permission https://www.irahelp.com/slottreport/rules-inherited-iras-may-surprise-nonspouse-beneficiaries. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Raymond James is not affiliated with and does not endorse the opinions or services of of Sarah Brenner, JD, The Slott Report, ED Slott, Ed Slott and Company, LLC, IRA Help, LLC, irahelp.com, or Ed Slott’s Master Elite IRA Advisor Group. Members of Ed Slott’s Elite IRA Advisor Group(SM) train with Ed Slott and his team of IRA Experts on a continuous basis. These advisors passed a background check, complete requisite training, attend semiannual workshops, webinars, and complete mandatory exams. They are immediately notified of changes to the tax laws.

Avoiding Spousal Beneficiary Mistakes

AVOIDING SPOUSAL BENEFICIARY MISTAKES

5 Easy Steps

Cornerstone is pleased to bring you this article by Ed Slott and Company, LLC, an organization providing IRA education and analysis to financial advisors, institutions, consumers, and media across the country. Our association with this organization helps us stay up to date on the latest developments in IRA and tax law. As always, give us a call if you’d like to discuss!

Who is a spouse beneficiary?

 

A spouse beneficiary:

    • Must be married to the account owner at the time of the account owner’s death, and
    • Must be named on the beneficiary form (or inherit directly through the document default provisions).

 As a spouse beneficiary you have unique options:

1. Split the inherited account if necessary. As a spouse beneficiary, you can take advantage of the special spousal rules if you are the sole beneficiary of an IRA account.

If other beneficiaries have been named, the spouse can still take advantage of these special provisions by transferring their portion of the inherited IRA to a separate account by December 31st of the year following the year of the IRA owner’s death.

2. Will you need money prior to age 59½. If so, you will likely want to remain a beneficiary of the inherited account. Death is an exception to the 10% early distribution penalty. So, by staying as a beneficiary you can avoid paying the 10% penalty.

The account should be retitled as a properly titled inherited IRA. As a spouse that remains a beneficiary you do not need to take RMDs from the account until the year the deceased spouse would have turned 73.

3. Transfer the inherited IRA into a spouse beneficiary’s account. As a spouse beneficiary you should generally roll the inherited IRA into your name. Once a younger spouse beneficiary reaches age 59½, there’s no advantage to remaining a beneficiary, and a spousal rollover or transfer should be done.

NO other beneficiary has this option. By doing this rollover or transfer, a surviving spouse ensures that eligible designated beneficiaries will be able to stretch distributions over their own life expectancies.

4. Name new beneficiaries. As the surviving spouse you should name your own beneficiaries. If no beneficiaries have been named and the surviving spouse dies, the remaining assets will pass according to the default provisions in the custodial document. This is frequently the estate of the now deceased spouse, which could require a shorter payout period for beneficiaries or add unnecessary time and expenses by tying the assets up in probate.

5. Consider a disclaimer. Before taking any action regarding an inherited IRA, as a surviving spouse you should evaluate whether a full or partial disclaimer would be advantageous. By using a disclaimer, some or all of the inherited IRA can be passed to contingent beneficiaries, potentially extending the stretch IRA and reducing the future impact of estate taxes for eligible designated beneficiaries.

Gordon Wollman and Ed Slott

Gordon Wollman, Founder and President of Cornerstone Financial Solutions, and Raymond James Wealth Advisor, with Ed Slott at the 2023 Spring workshop for members of Ed Slott’s Elite and Master Elite IRA Advisor Group℠.

Membership in Ed Slott’s Elite IRA Advisor Group(T)  is one of the tools our advisors use to help you avoid unnecessary taxes and fees on your retirement dollars. Gordon attends in-depth technical training on advanced retirement account planning strategies and estate planning techniques. And semiannual workshops analyzing the most recent tax law changes, case studies, private letter rulings, Congressional action and Supreme Court rulings help keep attendees on the cutting-edge of retirement, tax law and IRA distribution planning. Through his membership, Gordon is immediately notified of changes to the tax code and updates on retirement planning, and he has 24/7 access to Ed Slott and Company LLC to confer with on complex cases.

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. ACKNOWLEDGMENT: This article was published by Ed Slott and Company, LLC, an organization providing timely IRA information and analysis to financial advisors, institutions, consumers, and media across the country and is distributed with its permission. Copyright 2023, Ed Slott and Company, LLC. Raymond James is not affiliated with and does not endorse the opinions or services of Ed Slott or Ed Slott and Company, LLC.

 Raymond James is not affiliated with and does not endorse the opinions or services of ED Slott, Ed Slott and Company, LLC, IRA Help, LLC, or Ed Slott’s Master Elite IRA Advisor Group. Members of Ed Slott’s Elite IRA Advisor GroupSM train with Ed Slott and his team of IRA Experts on a continuous basis. These advisors passed a background check, complete requisite training, attend semiannual workshops, webinars, and complete mandatory exams. They are immediately notified of changes to the tax laws.

Quiz – Market Volatility vs Risk

What’s the Difference Between Market Volatility and Risk? 

While volatility is not the same as risk, the chances of incurring a loss may increase during periods of market volatility, in large part, that’s because investors become anxious about falling share prices and sell when they might be better off holding.

See what you know about the difference between risk and volatility by taking this brief quiz.

 1. What is market volatility?

a. Asset prices rising over a period of time.

b. Asset prices falling over a period of time.

c. The frequency and size of asset price swings, higher and lower.

d. A measure of how easy it is to buy and sell stock.

 

2. What is risk?

a. The chance of losing some or all of an investment.

b. The chance that actual investment returns will be different from anticipated investment returns.

c. A vulnerability that can be managed through asset allocation and diversification.

d. All of the above.

 

3. How can the effects of stock market volatility be limited?

a. By timing the market

b. By avoiding bonds

c. Through asset allocation and investment diversification

d. By avoiding stocks

 

4. Which famous investor said, “When people are desperately trying to sell, I buy. When people are desperately trying to buy, I sell. It has worked out very well over the years.”

a. Warren Buffett

b. Abby Joseph Cohen

c. Sir John Templeton

d. Abigail Johnson

Answers: 1) c1; 2) d2; 3) c3; 4) c4

 

If you feel overwhelmed and uncertain because of volatile markets, give us a call. You don’t have to go it alone! We can help you make sound decisions during difficult times.

Not a Cornerstone client?

Discover what’s possible when our 140 years of combined team experience and 30 years in business goes to work for you! Call 605-352-9490 or email cfsteam@mycfsgroup.com.

 

 

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Sources

1 https://www.forbes.com/advisor/investing/what-is-volatility/

2 https://www.investopedia.com/terms/r/risk.asp

3 https://www.investopedia.com/articles/active-trading/121014/protect-retirement-money-market-volatility.asp

4 https://novelinvestor.com/quote-author/john-templeton/

CSP #242150 07.18.23